Universal Credit is replacing six traditional benefits – but causing major stresses. Philip Bradfield and the JPI Investigations Team report
A gas fitter who was a “grafter” since he was 14 has found that switching over to Universal Credit has left him struggling to keep his home and feed his six children.
Londoner Paul Steward, 49, lives between Carryduff and Saintfield in Co Down and had been a self-confessed “grafter” since he was 14.
“For years we had a comfortable life. I had a couple of Mercedes convertibles and wanted for nothing. We had four holidays a year.”
However when his marriage broke down five years ago, he says he had no choice but to give up his job in order to look after his six children, now aged between eight and 17.
“It was tight. I still had to pay my mortgage or we were all homeless.”
I am about £150 a month down now that I have gone on to Universal Credit. But I still have to pay the same bills for my mortgage, car, heating, food, and clothes for seven people... When I was working and grafting I never dreamt I would ever be in this position.Paul Steward, single-father-of-six
Universal Credit (UC) is pushing tens of thousands into financial crisis across the UK – and Northern Ireland is not escaping the chaos being reported by claimants and charities.
Mr Steward found himself getting by on regular benefits until he was sent an erroneous bill for £15,000 in rates in February.
The bill was eventually struck down but he was told he had to switch to Universal Credit to qualify for rates relief.
“This is what I think is really bad; I filled out the online form [for Universal Credit]. But nowhere does it tell you that you are not going to get any money for five weeks.”
While he normally got up to £1300 in benefits per month, he was offered an interest free UC loan of only £1,100 to last him for a the longer period of five weeks.
However he had to pay it back over 12 months.
“Last summer I got pneumonia and was still on Employment Sickness Allowance (ESA).”
His lungs have still not fully recovered.
Up until recently he was getting ESA and child benefit every week and income support every fortnight. But now he gets paid UC once a month, which is also paid a month behind.
“I am about £150 a month down now that I have gone onto Universal Credit. But I still have to pay the same bills for my mortgage, car, heating, food, and clothes for seven people.
“Plus the Universal Credit started at the end of March and took five weeks to starting paying out. But now I have to repay the bridging loan by about £98 a month.”
“Another thing with universal credit is that the money you get back is capped after four children. I only get an allowance for four kids but I have actually have six children to feed, plus myself.”
While on child tax credits he was receiving £548.21 per week. But under the “dreaded” Universal Credit he now gets £469.87 per week, for himself and his six children.
He is still not clear if he his getting rates relief or not.
“If they say to me I have to pay £150 or £200 a month in rates I have to lose our house.
To compound his problems he built a major extension on his house when he only had two children, so he only gets mortgage support on the smaller part of his home.
Originally from London, he says his life would be much easier if he moved back to his family, but he stays in NI due to the quality of the education.
He has had to cut back on petrol and food expenses.
“We have to cut out after school football and youth clubs because of the fuel costs. I can’t afford to make multiple trips to school in the same day.”
“Before I would have preferred to buy more refrigerated food. But now we have to buy more cheap tinned food and eat more bread and soup.”
“When I was working and grafting I never dreamt I would ever be in this position.”
The controversial benefit is leaving an ever-growing number of people in deep rent arrears, with many social housing tenants across the UK potentially facing eviction.
And the latest phase of Welfare Reform will also impact full time workers on lower wages, farmers and those who become unable to work due to illness, redundancy or age, experts are predicting.
Universal Credit was rolled out in NI in 2017 and now has 40,000 live claims, with a further 260,000 people to be “migrated” over from the old system in 2020-23.
But one charity says the new system is riven with problems and the absence of Stormont oversight is a major problem.
In Freedom of Information figures uncovered by JPI, the Northern Ireland Housing Executive (NIHE) revealed that 92% of its tenants on Universal Credit (UC) are in rent arrears, compared to only 40% of tenants on Housing Benefit.
Kevin Higgins, head of policy with independent advice network Advice NI, said the “dynamite” figures provide key evidence of the “huge issue”.
“People claiming Universal Credit are almost automatically going to fly in to rent arrears which is a terribly stressful thing for many people that have never been a penny in arrears in all their lives,” he said.
“The delay in paying Universal Credit to claimants [often a five-week gap without benefits] can mean that their account can fall into arrears.”
It is already creating a major problem for social housing providers, he said.
Figures obtained by JPI from 145 local authorities across GB with housing stock, and the NIHE, show more than 120,000 UC claimants are now in rent arrears, owing a combined £84.5m.
In NI the 3,500 NIHE claimants who are in arrears have incurred a debt of £2.4m.
Margaret Greenwood MP, Labour’s shadow work and pensions secretary, said: “This important investigation is a shocking reminder that Universal Credit is clearly failing.”
Mr Higgins added: “Universal Credit currently makes up only 6% of total NIHE claimants getting help with rent, and yet it is responsible for 35% of the total arrears sum for NIHE.”
The average arrears for NIHE UC claimants is £700 compared to £192 for NIHE tenants on Housing Benefit.
Mr Higgins says helping claimants cope is “taking over the lives” of the 50 advisors manning its helpline.
“And that is with only 10% of the expected UC claimants in the system so far.”
One key problem is that all claimants have to make their own detailed claim online. One in five claimants drop out.
“It is incredible to think that we are rolling out such important changes that are having such a huge impact on people and we don’t even have a minister in place that is overseeing all this.”
While there will be public savings, he said, there will also be unintended costs on the criminal justice system, health service, voluntary sector, advice services and food banks.
He warned that the difficulties will also impact those with healthy incomes who are struck down by illness or unemployment and full-time workers on low wages. And with state retirement age gradually rising, it will also impact on older people who are no longer able to work.
An NIHE spokesman responded that it has a responsibility to collect rents and will continue to do so through its normal processes, but that it is rare for it to evict anyone and it supports tenants at risk.
“The introduction of Universal Credit has led to a significant increase in arrears for our tenants primarily due to the fact that Universal Credit is paid monthly in arrears and first payments for new claimants can take up to nine weeks to be received,” it said. However, arrears are “technical” and are not likely to be legally pursued.
He said Welfare Reform has also impacted its income with a separate application process for rates assistance, changes to direct payment regulations and changes to backdating rules. It is investing in its advice service to support tenants.
The total debt it has incurred through UC tenants only accounts for around 17% of its total £13.7m debt, it added. The Department for Communities said UC is running under Executive policy.
Two other charities are warning that UC will have a specific impact on farmers and the elderly.
Jude McCann, chief executive of charity Rural Support NI, said: “It is Rural Support’s opinion that Universal Credit (UC) is going to have a detrimental impact on many farm families, particularly those who are perhaps relying on tax credits to pay for household bills and essentials. We would encourage anyone concerned about the roll out of Universal Credit to contact the Independent [Advice NI] Welfare Changes Helpline – Freephone 0808 8020020.”
Rural Support says that while it does not have exact numbers of farmers in receipt of benefits, out of the 106,000 self-employed people in NI, 35,000 are in receipt of benefits and 18,000 of these live in rural areas – representing 17% of the total self-employed population.
The impact for self-employed people with Universal Credit is going to be “substantial” on the farming community, the charity warns.
Key issues of concern for farmers, it says, are:
:: The requirement to file a monthly income report;
:: Calculations are so complex it will be difficult to know if it is worth applying for;
:: Many farms operate at a loss during bad years and have significant season income variations, which will impact on monthly benefits;
:: Attending jobs and benefits offices for interviews.
These factors mean that some farm families will be “pushed below the poverty line”, the charity added.
Brenda Kearns, Age NI head of Advice and Advocacy, said its helpline has seen an increase in calls from older people who are concerned about UC.
“We’re hearing from older people who are expressing their confusion about the new system, and the potential impact changes to benefits may have on their circumstances,” she said.
At the outset there was cross-party support across the UK for the introduction of (UC), which merges six benefits into one – income support, jobseeker’s allowance, employment and support allowance, housing benefit, child tax credit and working tax credit.
However, there were significant difficulties with the roll-out, leaving many people with unpaid rent arrears.
For the first time in the UK, applicants must apply for the benefit themselves via a computer. But for many people who have never used one, this seems impossible. Figures suggest that one in five people drop out of the process, with experts fearing many are trying to survive by borrowing money and racking up rent arrears instead.
The overall monthly sums received by those who have switched onto UC are often significantly less than what they were used to.
Switching to UC leaves a delay of around five weeks without any income while claimants wait for their new UC payment to begin.
As a result many have to apply for an advance payment, usually significantly less than their old benefits. This must then be repaid within 12 months, often putting claimants under further pressure.
Unlike the old benefits, which were paid weekly or fortnightly, UC in GB is paid once a month in arrears. This has challenged many people with managing a monthly budget for the first time, leaving many unable to pay rent at the month’s end.
While housing benefit was previously paid direct to landlords, in GB the rental aspect of UC is paid direct to tenants, again, often resulting in landlords not getting their rent. However in NI, MLAs lobbied to ensure UC payments are made fortnightly and UC rent is paid direct to landlords, mitigating some of the worst impacts being felt in GB.
:: The Advice NI helpline number is freephone 0808 802 0020
:: Age NI advisors can give confidential advice on 0808 808 7575